Commercial Property Finance News:- Speculative office developments would help address Bristol’s chronic under-supply of grade A office space, says real estate advisors Savills.
Office-based employment is forecast to grow by 7.5 per cent with 8,686 new white collar jobs over the next five years.
Commercial Property Finance
However, the city’s office supply has rapidly decreased since 2010 and sits at just 450,000 sq ft of which less than 100,000 sq ft is grade A. Bristol city centre currently has a vacancy rate of just 3.6 per cent.
Savills commercial research analyst, Pearl Gillum, said: “Bristol doesn’t currently have enough available office supply to meet the demand for one year of take-up. Speculative development is therefore a welcome addition to the market and very much required to meet Bristol’s current demand.”
Developers seeking building finance for grade A offices would be able to put together a strong business case for commercial property finance.
New Schemes Expected
Bristol has two speculative developments under construction both due to complete in 2020. AXA/Bell Hammer’s Assembly Bristol will provide 200,000 sq ft of grade A space together with Public Realm and Riverside Walkway, which is due to complete in October 2020. Royal London is developing The Distillery due to finish in April 2020 and will offer an additional 90,000 sq ft in three separate buildings.
The city currently has a number of schemes in the pipeline totalling up to 850,000 sq ft. Some of these could be delivered as soon as 2021 but others may slip into 2022, warns Savills. Bristol is on track to have a steady flow of grade A space becoming available, but supply will remain tight until at least the summer of next year.
This lack of supply saw 2018 city centre take-up fall broadly in line with the long term average but 13 per cent below 2017. In total, Bristol city centre saw 532,000 sq ft of office space taken during 2018 across 105 deals, of which 129,000 sq ft could be considered grade A. However, in Bristol’s out-of-town market take-up was 26 per cent above the 10-year annual average, ending 2018 with a total office take-up of 401,000 sq ft.
Top rent achieved in 2018 was £35 per square ft – an increase of 8 per cent since 2017 with technology media and telecommunications accounting for nearly a third of take up. Savills expects rental growth of grade A and refurbished space to exceed £35 per sq ft in 2019.